Opinion
B322792
01-30-2024
O'MELVENY &MYERS LLP, Plaintiff, Cross- defendant and Appellant, v. OCEAN TOWERS HOUSING CORPORATION, Defendant, Cross- complainant and Respondent.
O'Melveny &Myers, Marc Feinstein, Sherin Parikh, and Abby Formella for Plaintiff, Cross-defendant and Appellant. Miller Barondess, James Goldman; Wittenberg Law and Jeffrey Wittenberg for Defendant, Cross-complainant and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. 21STCV08114. Steven J. Kleifield, Judge.
O'Melveny &Myers, Marc Feinstein, Sherin Parikh, and Abby Formella for Plaintiff, Cross-defendant and Appellant.
Miller Barondess, James Goldman; Wittenberg Law and Jeffrey Wittenberg for Defendant, Cross-complainant and Respondent.
ASHMANN-GERST J.
Appellant O'Melveny &Myers, LLP (O'Melveny) challenges the trial court's order denying O'Melveny's special motion to strike the first amended cross-complaint (cross-complaint) filed by respondent Ocean Towers Corporation (Ocean Towers) pursuant to Code of Civil Procedure section 425.16, California's anti-SLAPP statute. Specifically, on appeal, O'Melveny urges us to strike the following portions of Ocean Towers's crosscomplaint: (1) claims relating to the validity of O'Melveny's client; (2) claims relating to O'Melveny's alleged professional conflict; and (3) claims relating to O'Melveny's billing.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
SLAPP is an acronym for strategic lawsuit against public participation. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 813, overruled in part on other grounds in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.)
We affirm the denial of the anti-SLAPP motion with respect to all allegations except those targeting the validity of O'Melveny's client, as those allegations both arise from protected petitioning activity and lack the minimal merit required to survive an anti-SLAPP motion. Accordingly, we reverse the trial court's order with respect to those allegations and remand with directions to strike them from the operative cross-complaint.
FACTS AND PROCEDURAL BACKGROUND
We take these facts from "'the pleadings[] and supporting and opposing affidavits stating the facts upon which the liability . . . is based.'" (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier).)
I. The Underlying Derivative Action
Ocean Towers is a cooperative housing corporation that operates a large beachside apartment complex. Each person who purchases a residential unit at Ocean Towers becomes a shareholder, acquiring not just a property interest in the unit but also the shares of company stock attached to the unit. Shareholders "pay monthly fees to Ocean Towers in proportion to the number of shares owned-payments that cover Ocean Towers'[s] various expenses[.]"
Because of this arrangement, Ocean Towers refers to itself as a Homeowner's Association (HOA).
In 2015, an Ocean Towers shareholder filed a derivative action (the 2015 lawsuit). Principally, the 2015 lawsuit alleged that John Spahi (Spahi), a member of the board of directors (the Board), "in conjunction with family members and associates," including Ocean Towers's president and chief executive officer Joseph Orlando (Orlando) "caused Ocean Towers to incur significant expenses for [Spahi's] personal benefit."
II. The Terms of O'Melveny's Retention
In April 2017, the Board created a special litigation committee (the Committee) to investigate these claims. The Committee was empowered to select a law firm to assist it with the investigation, and it chose O'Melveny.
Shortly thereafter, O'Melveny, the Committee, and Ocean Towers executed an engagement letter (the April 2017 Contract) setting forth the terms of O'Melveny's representation. It clarified that the Committee, not Ocean Towers, would be O'Melveny's client. Regardless, Ocean Towers agreed to pay "the legal fees, charges and expenses incurred by the Committee for [O'Melveny's] work on its behalf."
Five months later, at the urging of the trial court presiding over the 2015 lawsuit, the Board drafted a supplemental resolution relinquishing its "authority to terminate the . . . Committee, or to remove individual members from" it, "without good cause, reviewable by the [trial] [c]ourt."
Throughout this period, several members of the Board stepped down from the Committee due to poor health or concerns about their independence or ability to serve. Upon the suggestion of the trial court, the Board eventually decided to amend Ocean Towers's corporate bylaws to allow nonshareholders to serve on the Board, limiting their service to work on the Committee. This was done to ensure that "members of the [Committee] are independent, disinterested, and have the requisite experience and skill required to fulfill the duties of the [Committee]."
By order of the trial court, two retired judges, Michael Latin (Judge Latin) and James Steele (Judge Steele), were then appointed to the Board and selected to serve on the Committee.
In December 2017, O'Melveny entered into a second engagement letter (the December 2017 Contract) with the reformed Committee and Ocean Towers. The December 2017 Contract essentially duplicated the terms of the April 2017 Contract; the Committee would be O'Melveny's only client, but Ocean Towers would pay its bills.
III. The Investigation and Payment Issues
After first being retained in April 2017, O'Melveny began an investigation at the direction of the Committee, "conduct[ing] interviews, collect[ing] thousands of documents, [and] prepar[ing] a 118-page report of its findings." By September 2017, Ocean Towers had paid $1.27 million of O'Melveny's invoices.
In December 2017, Orlando's counsel told O'Melveny that Ocean Towers's financial condition had deteriorated to the point that it would be unable to pay any further fees to O'Melveny. O'Melveny continued to perform work for the Committee and charge Ocean Towers.
On June 4, 2018, by order of the trial court presiding over the derivative action, O'Melveny filed the Committee's final report. O'Melveny continued to represent the Committee for another year, submitting invoices to Ocean Towers through June 2019, when a newly elected, independent Board began prosecuting the case as a direct action.
IV. O'Melveny's Lawsuit and Ocean Towers's Cross complaint
In March 2021, O'Melveny sued Ocean Towers to recover unpaid fees "for services rendered and costs incurred in connection with O'Melveny's representation of the . . . Committee." The complaint alleged that "the current outstanding balance owed by Ocean Towers to O'Melveny is $1,040,197.18."
In December 2021, Ocean Towers filed its cross-complaint against O'Melveny, alleging four causes of action.
On appeal, O'Melveny only challenges certain allegations made by Ocean Towers. Our summary of the cross-complaint omits allegations that are not relevant to this appeal.
1. Breach of contract
Ocean Towers leveled two causes of action for breach of contract against O'Melveny, one arising out of the April 2017 Contract and one arising out of the December 2017 Contract. As is relevant to this appeal, it alleged that O'Melveny breached the two agreements by "unethically bill[ing] [Ocean Towers][.]" Among other things, Ocean Towers claimed that O'Melveny "charge[d] . . . exceptionally high hourly rates for tasks that were unnecessarily performed by far more lawyers than were needed" and engaged in "bill padding and duplicative billing."
Ocean Towers also made separate allegations as to each agreement. It claimed that O'Melveny breached the April 2017 Contract because the law firm "was itself not independent of the defendants in" the 2015 lawsuit, because O'Melveny was allegedly "solicited by Spahi and Orlando through their attorney . . . to represent" the Committee. And it also alleged that the Committee was invalid when the December 2017 Contract was signed, since the retired judges then serving on the Committee "were prohibited from serving as members of the . . . Board . . . and . . . [the Committee][] because [Ocean Towers's] bylaws required that such persons be . . . shareholders."
2. Rescission and restitution
Second, Ocean Towers sought recission of both the April 2017 Contract and December 2017 Contract. It argued that rescission of the December 2017 Contract was necessary because both Ocean Towers and O'Melveny were mistaken about a material fact, namely whether people who were not "shareholders, were permitted to serve on the . . . Board of Directors and be appointed to serve on" the Committee. It also argued that both contracts violated California law and the Rules of Professional Conduct by (1) allowing O'Melveny to "charg[e]. . . unreasonable, unconscionable, and oppressive fees for performing unnecessary and duplicative services"; and (2) allowing persons who neither "serv[ed] as lawful directors of" Ocean Towers nor had "responsib[ility] for governing [its] affairs" "to make binding decisions for the Board."
3. Declaratory relief
Lastly, Ocean Towers requested declaratory relief in the form of "a judicial declaration of its rights or duties with respect to the [December 2017 Contract], the proper construction of, and the enforceability or unenforceability [there]of[,]" again referencing the parties' alleged disagreement over whether Judge Latin and Judge Steele could legally serve on the Committee.
V. O'Melveny's Anti-SLAPP Motion
In March 2022, O'Melveny filed an anti-SLAPP motion to strike the cross-complaint in its entirety. Among other things, it argued that the allegations in the cross-complaint attacked "the adequacy, purpose, and scope of an investigation performed by an attorney while representing a client[,]" "the expenditure of funds to prosecute an action[,]" and "the circumstances surrounding O'Melveny's retention and the firm's alleged failure to disclose supposed conflicts of interest," activities protected by the anti-SLAPP statute. It also claimed that Ocean Towers could not demonstrate a probability of success on the merits.
Ocean Towers opposed the motion, characterizing the crosscomplaint as "premised upon [O'Melveny] charging . . . unconscionable fees in connection with the" First and Second Letters, and its failure to disclose "conflicts of interest at the outset of the engagement [that] support the [Ocean Towers's] right to a refund of fees paid to" O'Melveny-activities that are not protected under the anti-SLAPP statute. It submitted thousands of pages of additional evidence in support of its arguments.
On June 17, 2022, the trial court denied O'Melveny's anti-SLAPP motion. It found that the cross-complaint did not challenge protected activity, but instead was "essentially about a fee dispute[,]" "directed toward whether O'Melveny had the right to the fees in the first instance, and the reasonableness of those fees" given Ocean Towers's concerns about "the legitimacy of the [Committee], . . . the concomitant enforceability of the contract[,] . . . [and] the reasonableness of fees for work already performed." The trial court concluded that "[r]esisting what is essentially a collection action is not a SLAPP."
VI. Appeal
O'Melveny timely appealed.
DISCUSSION
I. Relevant Legal Principles and Standard of Review
A. Anti-SLAPP
"A SLAPP is a civil lawsuit that is aimed at preventing citizens from exercising their political rights or punishing those who have done so." (Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, 21.) "In 1992, out of concern over 'a disturbing increase' in these types of lawsuits, the Legislature enacted section 425.16, the anti-SLAPP statute." (Ibid.; see § 425.16, subd. (a).)
Section 425.16, subdivision (b)(1), provides: "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." "Accordingly, a trial court tasked with ruling on an anti-SLAPP motion must ask two questions: (1) has the moving party 'made a threshold showing that the challenged cause of action arises from protected activity' [citation], and, if so, (2) has the nonmoving party 'established . . . a probability that [it] will prevail' on the challenged cause of action by showing that the claim has 'minimal merit' [citations]?" (Abir Cohen Treyzon Salo, LLP v. Lahiji (2019) 40 Cal.App.5th 882, 887.)
"[A]n anti-SLAPP motion, like a conventional motion to strike, may be used to attack parts of a count as pleaded" even if the stricken allegations do not defeat any single cause of action in its entirety. (Baral v. Schnitt (2016) 1 Cal.5th 376, 393, 395 (Baral) ["[P]articular alleged acts giving rise to a claim for relief may be the object of an anti-SLAPP motion." (Italics in original.)].) Allegations stricken under the anti-SLAPP statute are "eliminated from the [pleading], unless they also support a distinct claim on which the plaintiff has shown a probability of prevailing." (Id. at p. 396.)
B. Standard of Review
"We review de novo the grant or denial of an anti-SLAPP motion." (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067 (Park).) In particular, "[w]e exercise independent judgment in determining whether, based on our own review of the record, the challenged claims arise from protected activity." (Ibid.)
II. Preliminary Issues Regarding the Scope of the Appeal
As set forth above, in its anti-SLAPP motion, O'Melveny asked the trial court to strike the entire cross-complaint. On appeal, O'Melveny modifies its position and asks us to direct the lower court to strike only selected portions of the cross-complaint. Ocean Towers's objection notwithstanding, we can and do consider whether these specific portions of the cross-complaint must be stricken pursuant to the anti-SLAPP statute. (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009-1012 (Bonni); Ratcliff v. The Roman Catholic Archbishop of Los Angeles (2022) 79 Cal.App.5th 982, 1001-1002.)
III. Analysis
A. Protected Activity
We first consider whether O'Melveny met its burden to show that the challenged portions of the cross-complaint target protected activity.
1. Additional relevant law
Under the anti-SLAPP statute, "[a] claim arises from protected activity when that activity underlies or forms the basis for the claim. [Citations.] Critically, 'the defendant's act underlying the plaintiff's cause of action must itself have been an act in furtherance of the right of petition or free speech.' [Citations.]" (Park, supra, 2 Cal.5th at pp. 1062-1063.) "A breach of contract claim can arise from protected activity if the action allegedly breaching the contract is itself protected." (Bonni, supra, 11 Cal.5th at p. 1025; see also, e.g., Navellier, supra, 29 Cal.4th at p. 90 [a breach of contract claim alleging that the filing of a cross-complaint breached a settlement agreement arises from protected activity].)
Conversely, "[a]llegations of protected activity that merely provide context, without supporting a claim for recovery, cannot be stricken under the anti-SLAPP statute." (Baral, supra, 1 Cal.5th at p. 394; see also Drell v. Cohen (2014) 232 Cal.App.4th 24, 29 (Drell) ["Protected conduct that is merely incidental to the claim does not fall within the ambit of" the anti-SLAPP statute].) Courts must "respect the distinction between activities that form the basis for a claim and those that merely lead to the liability-creating activity or provide evidentiary support for the claim." (Park, supra, 2 Cal.5th at p. 1064.)
2. Application
On appeal, O'Melveny challenges several specific allegations across the four causes of action in the cross-complaint, apparently conceding that the remainder of the cross-complaint appropriately survived its anti-SLAPP motion. We examine each challenged allegation to determine whether they arise from protected activity. (Cordoba Corp. v. City of Industry (2023) 87 Cal.App.5th 145, 151.)
For ease of analysis, and consistent with the parties' briefs, we have grouped the challenged allegations into three groups.
a. Fees and billing practices
Most of the allegations O'Melveny challenges on appeal relate to its fees and billing practices. O'Melveny argues that its anti-SLAPP motion should have been granted with respect to the allegations that (1) its "invoices were excessive" and it "included charges at exceptionally high hourly rates for tasks that were unnecessarily performed by far more lawyers than were needed . . .[;]" (2) Ocean Towers "already has paid O'Melveny for purported legal services, that were unnecessary, duplicative, oppressive[;]" (3) Ocean Towers "also has discovered that O'Melveny unethically billed [it] under the [First Letter] by, among other things, bill padding and duplicative billing" and "continued its unethical billing . . . under the [Second Letter] by, among other things, bill padding and duplicative billing[;]" and (4) "O'Melveny violated California Rules of Professional Conduct by, among other things, charging . . . unreasonable, unconscionable, and oppressive fees."
Each of these allegations claims that O'Melveny breached the contract (or, alternately, that the contract is subject to rescission) because it unethically charged and/or billed Ocean Towers for work done in anticipation of the 2015 lawsuit. But disputes about the validity of an attorney's fees or billing practices do not arise from protected petitioning activity just because "petitioning activity is part of the evidentiary landscape within which [the allegations] arose." (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1272 (Hylton).)
Instead, these allegations arise from an attorney's independent professional duties to ensure that "fee agreements and billings '"[are] fair, reasonable, and fully explained'"" (Bird, Marella, Boxer &Wolpert v. Superior Court (2003) 106 Cal.App.4th 419, 430-431) and to avoid charging unconscionable fees (Rules of Professional Conduct, Rule 1.5). (See, e.g., Hylton, supra, 177 Cal.App.4th at p. 1274 [the anti-SLAPP statute does not apply when the gravamen of the challenged claim rests on an attorney's alleged violation of his fiduciary obligation to a client by, among other things, "induc[ing] [the client] to pay an excessive fee"].)
O'Melveny raises two counterarguments. First, it argues that Hylton does not apply to this case because, unlike in that case, here "there was no attorney-client relationship between O'Melveny and Ocean Towers . . . [its] role was limited to that of a third-party payor."
We disagree. "Whether [a party] actually share[s] an attorney-client relationship . . . relates to the merits of her claims and is therefore not relevant to our first prong analysis. Although [O'Melveny] may ultimately defeat [Ocean Towers's] claims by proving the absence of an attorney-client relationship, that does not alter the substance of [its] claims." (Sprengel v. Zbylut (2015) 241 Cal.App.4th 140, 157 (Sprengel).)
O'Melveny attempts to rebut this conclusion by relying on Thayer v. Kabateck Brown Kellner LLP (2012) 207 Cal.App.4th 141 (Thayer) for the proposition that "nonclients' causes of action against attorneys" are "within the ambit of SLAPP." (Id. at p. 158.) Thus, according to O'Melveny, Ocean Towers's (the nonclient) claims against it (the attorneys) fall within the scope of the anti-SLAPP statute. But in Thayer, the claims against the law firm were based upon the law firm's "constitutionally protected activity undertaken on behalf of the actual clients represented in the" underlying litigation (id. at p. 155), "a litigation, not incidentally, to which [the plaintiff] was not even a party." (Id. at p. 156; see also id. at pp. 153-154 [citing cases holding that the anti-SLAPP statute protects lawyers sued for litigation-related speech and activity]; Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 (Rusheen).) Here, in contrast, the gravamen of Ocean Towers's claims against O'Melveny is not the petitioning activity that the firm conducted on its client's behalf; nor is Ocean Towers a third party completely uninvolved in the underlying litigation. Rather, we are addressing limited allegations about fees and billing practices, made by a payor who is contractually obligated to pay the invoices generated by the law firm.
O'Melveny offers no legal authority in support of its suggestion that a nonclient's payment of fees constitutes petitioning activity within the scope of the anti-SLAPP statute.
Second, O'Melveny argues that "any act . . . in furtherance of the . . . right of petition" (§ 425.16, subd. (b)(1)) includes "communicative conduct such as the filing, funding, and prosecution of a civil action." (Rusheen, supra, 37 Cal.4th at p. 1056.) O'Melveny contends that any allegations concerning the propriety of its fees arise from the "funding . . . of a civil action" and thus qualify as protected activity under the anti-SLAPP statute. (Ibid.)
In civil cases, funding the services of an attorney to prosecute or defend a lawsuit is an act in furtherance of petitioning activity that is protected under the anti-SLAPP statute. (Rusheen, supra, 37 Cal.4th at p. 1056.) This makes sense in the arena of civil litigation; because there is no right to counsel, the ability to retain private counsel for litigation can affect its course and outcome. As a result, the funding of litigation has been found to be petitioning activity when the money spent was to ensure a party could commence and maintain a legal action. (See, e.g., Takhar v. People ex. rel. Feather River Air Quality Management Dist. (2018) 27 Cal.App.5th 15, 28; Sheley v. Harrop (2017) 9 Cal.App.5th 1147, 1166-1168; Tuszynska v. Cunningham (2011) 199 Cal.App.4th 257, 268.)
Applied to the instant appeal, this proposition implies that the anti-SLAPP law would protect Ocean Towers from a lawsuit targeting the propriety of its payments to O'Melveny, rather than protecting O'Melveny (who did not fund any litigation) from a lawsuit brought by a contractually obligated payor challenging the firm's allegedly unethical charging and billing practices.
"None of the purposes of the anti-SLAPP statute would be served by elevating a fee dispute to the constitutional arena[.]" (Drell, supra, 232 Cal.App.4th at p. 30.) It follows that the allegations regarding O'Melveny's fees and billing practices do not arise from protected activity.
b. Conflict of interest
Next, O'Melveny asks us to strike the allegations that a conflict of interest existed because Orlando and Spahi's counsel solicited O'Melveny to represent the Committee in the investigation of, among other things, claims of wrongdoing by Orlando and Spahi.
These allegations are not based on protected activity for similar reasons as the allegations about O'Melveny's fees and billing practices. Like allegations in a fee dispute, the gravamen of a conflict of interest allegation is the law firm's violation of its professional duties. Thus, despite O'Melveny's assertions to the contrary, an attorney's representation of a client while laboring under a conflict of interest in violation of his or her ethical duties does not, in itself, involve protected activity. (Sprengel, supra, 241 Cal.App.4th at pp. 150-151.) And, again, whether Ocean Towers has the requisite relationship required to pursue a conflict of interest claim goes to the second prong of anti-SLAPP analysis (probability of success on the merits) rather than the first prong (protected activity). (Id. at p. 157.)
Unlike in its arguments challenging the fee and billing practice allegations, O'Melveny does not argue that Ocean Towers's status as a third party payor affects whether its conflict of interest allegation arises from protected activity.
c. Validity of the Committee
Finally, O'Melveny challenges the allegations (1) Ocean Towers "is not obligated to make payment to O'Melveny for services purportedly provided pursuant to" the December 2017 Contract "because no valid [Committee] was ever formed in relation thereto[,]" and (2) "[t]he public interest will be prejudiced by permitting the contract to stand because it is in violation of California law governing corporations requiring that only directors are empowered to make binding decisions for the board of directors." These allegations are predicated upon what Ocean Towers characterizes as the wrongful appointment of nonBoard members (i.e., Judge Steele and Judge Latin) to the Committee.
O'Melveny successfully demonstrated that these claims arise from protected activity. It attached to its anti-SLAPP motion a court order in which the trial judge presiding over the 2015 lawsuit selected Judge Steele and Judge Latin to serve on the Committee and ordered Ocean Towers to "hold a [B]oard meeting to . . . pass a resolution appointing the[m] . . . to the [Committee]." It also attached a resolution of the Board complying with the court order.
Judge Steele and Judge Latin were appointed to the Committee via a "writing made before a . . . judicial proceeding" (i.e., the court order) as well as a "writing made in connection with an issue under consideration or review by a . . . judicial body" (i.e., the Board resolution carrying out the court order). (§ 425.16, subd. (e).) These communicative acts are expressly protected by the anti-SLAPP statute.
B. Probability of Success on the Merits
We need not reach the second step of the anti-SLAPP analysis with respect to any allegations that do not arise from protected activity. Given our conclusions above, we only assess whether Ocean Towers has demonstrated a probability of success on the merits with respect to its allegations that Judge Steele and Judge Latin were improperly appointed to the Committee.
1. Additional relevant law
"A claim has [the] 'minimal merit'" required to survive an anti-SLAPP motion "if it is '"both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by [Ocean Towers] is credited."' [Citations.]" (Gruber v. Gruber (2020) 48 Cal.App.5th 529, 537.) Therefore, "when the . . . court examines [Ocean Towers's evidence] filed in support of [its] second step burden, the court must consider whether [it] has presented sufficient evidence to establish a prima facie case on [its] cause[ ] of action, and . . . when the . . . court considers [O'Melveny's] opposing [evidence], the court cannot weigh [it] against [Ocean Towers's evidence], but must only decide whether [O'Melveny's evidence], as a matter of law, defeat[s] [Ocean Towers's] supporting evidence." (Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174, 184.)
An anti-SLAPP motion should only be granted if the claimant fails to meet this burden. (Mattel, Inc. v. Luce, Forward, Hamilton &Scripps (2002) 99 Cal.App.4th 1179, 11881189.)
2. Application
Portions of Ocean Towers's claims for breach and rescission of the December 2017 Contract are based on allegations that Judge Steele and Judge Latin were wrongfully appointed to the Committee.
On appeal, Ocean Towers does not argue that it demonstrated a probability of success with respect to these allegations. On our own review of the record, we conclude that evidence submitted with the pleadings, as a matter of law, establishes that Ocean Towers cannot prevail on its claims to the extent that those claims rely on allegations that Judge Steele and Judge Latin were wrongfully appointed.
As described above, O'Melveny submitted a court order selecting Judge Steele and Judge Latin to serve on the Committee and ordering Ocean Towers to "hold a [B]oard meeting to . . . pass a resolution appointing the[m] . . . to the [Committee][,]" along with evidence that Ocean Towers promptly complied. The resolution appointing them to the Committee was preceded by an amendment of the corporation's bylaws allowing nonshareholder directors to serve on the Board for the limited purpose of serving on the Committee; the resolution passing that amendment explained that the Board "ha[d] determined with the advice of [its] legal counsel that the Ocean Towers [b]ylaws do not restrict the ability of the Board to adopt, amend, or repeal the . . . [b]ylaws," consistent with section 211 of the Corporation Code.
This body of evidence establishes that from December 2017 through June 2019, the entire 18-month period when O'Melveny was providing legal services to the Committee under Judge Steele and Judge Latin, Ocean Towers agreed that both retired judges were lawfully appointed. And Ocean Towers does not proffer any evidence that it ever objected to the constitution of the Committee before countersuing O'Melveny in January of 2022. (See Reilly v. Inquest Technology, Inc. (2013) 218 Cal.App.4th 536, 552 ["'[A]n appellant may waive his right to attack error by expressly or impliedly agreeing at trial to the ruling or procedure objected to on appeal.' [Citations.]"]; Wind Dancer Production Group v. Walt Disney Pictures (2017) 10 Cal.App.5th 56, 78 ["'"'California courts will find waiver . . . when that party's acts are so inconsistent with an intent to enforce [a contractual] right as to induce a reasonable belief that such right has been relinquished'"'"].)
In its opposition to the anti-SLAPP motion, Ocean Towers submitted a declaration from its attorney, Jeffrey Wittenberg (Wittenberg), who represented the plaintiff in the 2015 derivative action until January 2019; when the lawsuit converted into a direct action prosecuted by Ocean Towers in June 2019, he began representing Ocean Towers. In his declaration, Wittenberg argued that in 2017, he objected that the Board's amendment allowing nonshareholder directors to serve on the Committee violated Ocean Towers's bylaws. However, as Wittenberg was not representing Ocean Towers at the time of his objection, we cannot impute that objection to the company now. Additionally, the trial court presiding over the derivative action apparently overruled Wittenberg's objection, and Ocean Towers does not show that it ever appealed or otherwise sought reconsideration of that decision.
Furthermore, Ocean Towers's claim for rescission based on contravention of public policy alleges that both agreements violate "California law governing corporations requiring that only directors are empowered to make binding decisions for the board of directors[,]" but identifies as its sole legal basis for that claim a statute that has been repealed since 1994. (Former § 1689 [repealed] Stats. 1992, ch. 162, § 6, operative Jan. 1, 1994].)
For these reasons, we conclude that, as a matter of law, Ocean Towers's claims do not possess the minimal merit required to survive an anti-SLAPP motion to the extent that they are based on allegations that Judge Steele and Judge Latin were wrongfully appointed to the Committee.
Curiously, on appeal, O'Melveny does not ask us to strike certain portions of the operative cross-complaint that rely on these allegations, such as paragraphs 37, 38, and 58. However, having found that these allegations should be struck pursuant to the anti-SLAPP statute, we direct the trial court on remand to strike all portions of the cross-complaint alleging that Judge Steele and Judge Latin were wrongfully appointed to the Committee.
DISPOSITION
The trial court's order denying O'Melveny's anti-SLAPP motion is affirmed in part and reversed in part. We remand the matter and direct the trial court to strike those portions of the cross-complaint alleging that Judge Steele and Judge Latin were wrongfully appointed to the Committee. In all other respects, the order is affirmed. The parties shall bear their own costs on appeal.
We concur:, P. J. LUI, J. CHAVEZ, J